Strict measures must be enforced as common people face financial strain
PRICES of essential commodities are rising in the market, while the real income of common people remains stagnant. Most people are now at their wits’ end due to the overall rise in the cost of living.
The situation has reached a point where many individuals with limited incomes are forced to rely on loans to meet daily expenses.
Consequently, consumers’ borrowing is increasing as they struggle to balance their income and expenditure.
However, the demand for bank loans for business and investment purposes has declined.
The concerning aspect is that if this trend continues, a segment of society will become burdened with debt and their capacity to repay it will diminish, an ominous sign for the entire economy.
A recent Bangladesh Bank data reveals that consumer loans in the country rose by Tk 5,364 crore during the three-month period from April to June of this year.
By the end of June, the outstanding consumer loan balance stood at Tk 163,699 crore, whereas at the end of March, the figure was Tk 158,335 crore.
The data further shows that consumer loans grew by Tk 13,358 crore over the nine-month period from September last year to June of this year.
Those familiar with the situation indicate that many families are turning to bank loans not for extravagant spending, but to cover the rising costs of living.
As inflation erodes purchasing power, people are borrowing money to meet expenses in essential sectors such as education, healthcare, and housing.
The question remains: while such loans certainly help individuals manage their daily expenses, do they play any role in increasing their income? If that does not happen, the debt burden on the family will increase in the days ahead, alongside a growing tendency to take on further debt-a trend that ultimately bodes ill.
Media reports indicate that the flow of credit to the industrial sector is very low. At the end of March, the outstanding bank credit in the industrial sector stood at Tk 794,662 crore; by the end of June, it had risen to Tk 795,214 crore.
This means credit increased by only Tk 552 crore over the three-month period. Observers have warned that the lack of credit growth in the industrial sector is a matter of serious concern.
We believe that restoring the expected momentum to the economy is a key task in overcoming the ongoing crisis.
To achieve this, the government must create an environment of confidence to boost private sector investment.
An increase in domestic investment will also attract foreign investors. Alongside this, strict measures must be taken to curb market chaos.
